CASH SCARCITY IN NIGERIA AS CBN INTRODUCES MORE RESTRICTIONS TOWARDS ENABLING CBDC ADOPTION
Nigeria, Africa’s most populous country, introduced the Central Bank Digital Currency (CBDC ) into her financial system on the 25th of October 2021. The Nigerian government has put restrictions on the amount of cash that can be withdrawn.
written by: Heritage Falodun
Nigeria, Africa’s most populous country, introduced the Central Bank Digital Currency (CBDC ) into her financial system on the 25th of October 2021. An action that has given birth to different sets of financial policies, regulations, and restrictions from the central bank of Nigeria. In an attempt to drive consumers towards alternative options, the Nigerian government has put restrictions on the amount of cash that can be withdrawn. Nigeria has limited cash withdrawal from banks to about $225 which is around N100,000 per week with a daily limit of about $45, a bid aimed towards driving adoption for her centralized digital currency, the eNaira, issued by the Central Bank. Nigeria's financial terrain has been a rollercoaster of economic sabotage since the launch and legalization of the eNaira.
Source : 21st Century chronicle
In Godwin Emefiele’s (Governor, Central Bank of Nigeria) words, the whole essence of CDBC is “to ensure that more people in this country are financially included. If you see, a lot has happened in terms of the evolution of money from commodity to metallic, then paper, to plastic and now we are talking of digital. And so, we need to be at pace with where the world is moving”. In his opinion, Nigerians would have admitted that the CBDC will be the solution to their financial predicaments such as inflation, monetary censorship, rigorous payment rails, epileptic cross-border payment channels, and rigid access to foreign exchange among others. Not surprisingly, the reverse is the case as the situation on the ground in Nigeria right now is gradually moving from “banking the unbanked” to “un-banking the banked”
Elucidating the context of what this really entails. On the 2nd of February 2023 which was just 2 days after the initial January 31st, 2023 deadline set aside by the Central Bank of Nigeria for all Nigerians to return the Old Naira denomination of N200, N500, and N1000 notes. A Nigerian named Oluwasegun Kosemani ( CEO, BotMeCash ) tweeted this “I just spent N1000 from my Naira MasterCard by GTBank to buy N10,000 cash from a Palmpay POS. The Nigerian Government is intentionally forcing its citizens into a cashless Keynesian economy while they position their surveillance CBDC -eNaira as the final destination”. The well-informed Nigerian youth, 70% of Nigeria’s population, understand that these regulations are mostly about financial control. The regulations are about pushing a cashless policy where the government has complete control over all citizens while having the luxury of tracking every single transaction.
Source : Twitter
Judging by the less than 0.5% adoption rate on eNaira after its launch about 16 months ago, only Government actions such as the restrictions and policies like the ones Nigerians are battling with right now can force people towards using the CBDC. Nevertheless, Nigerians' disposition is visible to the blind and audible to the deaf as the country tops the list of countries in the world with the highest Bitcoin & Crypto exposure. During the course of gathering news and information for this content, I spoke with a few Business owners and a Bitcoin OTC liquidity provider in Nigeria. Mr. Eric Ogbekene who works in the media & tech industry in Nigeria but also runs a Bespoke men’s fashion business on the side said “The cash swap policy has been ridiculous, to say the least. Today, 4th of February 2023 alone, you could not get any physical cash in the entire Garki ultra-modern market in Abuja, Nigeria. People are unable to take care of little business deals, like cash for services, transportation, etc. it’s so bad because even the traditional banking applications seem to be overwhelmed by the sudden surge in transactions and cannot cope”.
On the other hand, I became extremely curious. I interviewed an Over-The-Counter Bitcoin liquidity provider named Oluwatimilehin Kayode popularly known as Pander by his customers and merchants. “How have you been coping with business amidst this new policy and cash shortage ?” He responded “Bro, e no dey easy like that oo, but we dey push am, if I will be honest with you. It’s crazy, it affected our P2P dealings a bit on exchanges as most transactions keep showing bank network errors and also there are limits on transactions & high charges, but as you know Bitcoin will always find a way out for us amidst all restrictions. Although we had low access to cash over the counter but we keep pulling the P2P transactions through with Bitcoin & Tether using our existing conventional ways”
Mary Imasuen’s submission was that “If vendors were open to accepting bitcoin payments, we wouldn't have to deal with the craziness happening in the country right now”. Sharing her odyssey amidst the cash and transaction struggles. She experienced people withdrawing N20,000 with N3,000 as charges being paid to the merchants, she stated that money is being sold for money right now. Nigeria has always been a cash society and with the current issues going on, people can't get cash from banks or ATMs. Those who get cash paid for it at a premium and the prices of goods in her opinion have skyrocketed.
Perplexed, is an understatement, but I personally feel Nigerians are resilient. No wonder, Ray Youssef, “CEO of Paxful” said, “the youth of Nigeria taught me to think beyond the financial systems of the West and look into alternative payments to buy Bitcoin”. Nigerians need to know right now that the CBDCs are here and slowly but surely the government will continuously restrict citizens' access to cash until it’s gone and they fully take away everyone’s financial freedom. Proffering sustainable solutions, the best bet and only solution for Nigerians towards attaining a decentralized cashless economy is Bitcoin, which is unlike being in the cage of financial slavery spread headed with CBDC. Bitcoin’s blockchain democratizes finance with proof of work by signing transactions in a distributed, open and transparent ledger while CBDC offers a centralized and closed-sourced hyperledger fabric that gives full control and issuance to the Government. Until Nigerians decide to intrinsically separate money from state actors, the masses will remain slaves to central authorities. This is more of an opportunity to opt-out and break the shackles of financial restrictions with Bitcoin.